Carlyle Global Credit Launches Decarbonization-Linked Financing Program
- Financings tied to borrowers’ achievement of tailored climate-related targets
- Among the first of its kind in the US private credit market
- Carlyle announces closing of first two decarbonization-linked loans under the program
NEW YORK – Global investment firm Carlyle (NASDAQ: CG) announced today that its Global Credit platform has launched a decarbonization-linked financing program, providing an incentive for borrowers to reduce greenhouse gas (GHG) emissions or achieve other climate-related targets. The initiative is among the first decarbonization-linked financing programs available in the US private credit market, and represents the latest step in Carlyle’s ongoing efforts to drive progress in the energy transition.
Through the program, Carlyle offers a pricing benefit tied to a borrower’s achievement of decarbonization targets or other tailored climate-related KPIs. Carlyle and participating borrowers will work closely together to assess and monitor appropriate KPIs, while Carlyle’s dedicated ESG team will provide on-going support and expertise to assist borrowers in achieving climate-related goals.
Mark Jenkins, Carlyle’s Head of Global Credit, said, “We believe that strong ESG competencies are a hallmark of management excellence, and that successful decarbonization requires meaningful engagement between investors and businesses. Through this program, we seek to drive value by helping borrowers improve their competitive positioning, while building on Carlyle’s long history of ESG integration.”
Megan Starr, Carlyle’s Global Head of Impact, said, “This innovative decarbonization-linked financing program provides another avenue for Carlyle to support its investment portfolios in a changing world, and drive meaningful action on the transition to a lower carbon future. As a non-controlling asset class, credit naturally has lagged private equity’s ability to collect ESG data and incentivize ESG improvements. This new approach addresses both challenges, and we believe it may result in significant carbon emissions reductions within our portfolio over time.”
Carlyle also announced the recent closing of its first two debt financings with decarbonization-linked terms, in each of which Carlyle served as lead investor and Administrative Agent. These included financings in support of:
- Morgan Stanley Capital Partners’ buyout of Fairway Lawns, a market leading provider of residential lawncare services in the Southeast United States; and
- American Industrial Partners’ refinancing in support of its portfolio company The Carlstar Group, an industry leader of specialty tires and wheels.
Both deals included potential pricing reductions related to reducing the intensity of the businesses’ GHG footprints, or other related ESG KPIs.
Carlyle is a demonstrated leader in advancing ESG efforts in the investment industry. We were one of the first major private equity firms to publish a Task Force on Climate-related Financial Disclosures (TCFD) report, led a partnership with CalPERS and others to create the ESG Data Convergence Initiative, and were among the first major global private equity firms to establish net zero greenhouse gas emissions goals. In Global Credit, in addition to the decarbonization-linked financing program, Carlyle developed a market-leading ESG Materiality Analysis tool to create a systematic approach to ESG integration, including ESG risk ratings to help increase the nuance with which we can underwrite and price risk.
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Carlyle (NASDAQ: CG) is a global investment firm with deep industry expertise that deploys private capital across three business segments: Global Private Equity, Global Credit and Global Investment Solutions. With $376 billion of assets under management as of June 30, 2022, Carlyle’s purpose is to invest wisely and create value on behalf of its investors, portfolio companies and the communities in which we live and invest. Carlyle employs more than 1,900 people in 26 offices across five continents. Further information is available at www.carlyle.com. Follow Carlyle on Twitter @OneCarlyle.
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